The move is part of its strategy to promote investment in Thailand and catch up with rival Toyota.

Nissan last year launched a four-year capital investment plan that will see it spend US$757 million (Bt29 billion) on research and development, and upgrading its plants and sales network.

The company will increase production at its assembly plant on Bang Na-Trat Road to 240,000 units by 2009. About 130,000 units will be sold domestically and the rest will be exported. Ten new models, including subcompacts, will be introduced to the Thai market during the four-year period.

Yasuaki Hashimoto, Nissan's vice president for overseas markets, said free-trade agreements would greatly benefit the automobile industry.

Nissan "just started investing seriously in Thailand two years ago and there's still a big handicap between Toyota and us," Hashimo-to said. "We have an aggressive plan to invest in Thailand as we need to fill the gap with Toyota."

Thailand's attractiveness is its location at the centre of Southeast Asia and its cluster of auto-parts suppliers, he said.

Nissan South East Asia Co Ltd was recently set up in Thailand to buy vehicle parts and components. It will export Thai parts and components to its plants all over the world, including Japan, Europe and China.

"Thailand is quite competitive in costs and parts suppliers," Hashimoto said. "The government did a very good job in making Thai products competitive in export markets."

As part of its "parts localisation" programme, Nissan set up an R&D centre in Thailand two years ago to work with local suppliers to develop parts and components.

"The Thai government has opened the country to foreign capital and is promoting exports. It has also promoted good circumstances to encourage foreign automakers to invest," he said. "As an automaker, we need volume."

About $300 million is needed to develop a new model and a minimum volume of 10,000 units is required to start local production, he said.

Economic and political issues had pushed the Thai market into a brief downswing, Hashimoto said. "I still have confidence in the Thai government and what it has done to support the automobile industry. I'm very sure that once the problems have been solved, the automobile [industry] will bounce back."

Kwanchai Rungfapaisarn

The Nation

Tokyo